When using the cycle approach to segmenting the audit, the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that:
A) most capital acquisition and repayment cycle accounts involve few transactions, but each is often highly material and therefore should be audited extensively.
B) the transactions are related to financing a company rather than to its operations.
C) both A and B above
D) neither A nor B above

Question

Quizplus · Accepted Answer

The capital acquisition and repayment cycle is distinct because it involves financing activities, which are separate from operational activities like acquiring goods and services. Additionally, these transactions are often few but highly material, necessitating thorough auditing.

When Using the Cycle Approach to Segmenting the Audit, the Reason